OPINION OF ADVOCATE GENERAL

LÉGER delivered on 10 April 2003 (1)

((Failure of a Member State to fulfil its obligations – Pre-litigation procedure – Subject-matter of the dispute – Determination – Letter of formal notice – Directive 77/187/EEC – Safeguarding of employees' rights in the event of transfers of undertakings – Scope of application))

In the present proceedings, the Commission of the European Communities seeks a declaration that the Italian Republic has failed to fulfil its obligations under Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses. (2)

The Commission complains that the Italian authorities do not apply Directive 77/187 to transfers of undertakings taking place in the context of certain administrative or judicial procedures, that is, procedures for declaring undertakings to be in critical difficulties, special administration procedures and approved composition procedures consisting in the disposal of assets.

I ─ Legal background

Community law

As stated in the second recital in its preamble, Directive 77/187 seeks to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded.

Under Article 1(1), the directive is to apply to the transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger.

Under the first subparagraph of Article 3(1) of Directive 77/187, the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer are, by reason of such transfer, to be transferred to the transferee.

Article 4(1) of the directive provides that the transfer of an undertaking, business or part of a business is not in itself to constitute grounds for dismissal by the transferor or the transferee. That provision however does not preclude dismissals that may take place for economic, technical or organisational reasons entailing changes in the work-force.

Article 4(2) of Directive 77/187 provides, furthermore, that if the contract of employment or the employment relationship is terminated because the transfer involves a substantial change in working conditions to the detriment of the employee, the employer is to be regarded as having been responsible for termination of the contract of employment or of the employment relationship.

During the pre-litigation procedure Directive 77/187 was replaced by Council Directive 98/50/EC of 29 June 1998. (3)

The Council considered that it was necessary to allow Member States to further the survival of insolvent undertakings and companies declared to be in a state of crisis. (4) The Council therefore introduced derogations from the regime provided for under Articles 3 and 4 of Directive 77/187/EEC by inserting Article 4a, which provides as follows:

(a) notwithstanding Article 3(1), the transferor's debts arising from any contracts of employment or employment relationships and payable before the transfer or before the opening of the insolvency proceedings shall not be transferred to the transferee, provided that such proceedings give rise, under the law of that Member State, to protection at least equivalent to that provided for in situations covered by Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer [OJ 1980 L 283, p. 23. Directive as amended by Directive 87/164/EEC (OJ 1987 L 66, p. 11)]; and, or alternatively, that

(b) the transferee, transferor, or person or persons exercising the transferor's functions, on the one hand, and the representatives of the employees on the other hand may agree alterations, in so far as current law or practice permits, to the employees' terms and conditions of employment designed to safeguard employment opportunities by ensuring the survival of the undertaking, business or part of the undertaking or business.

A Member State may apply paragraph 2(b) to any transfers where the transferor is in a situation of serious economic crisis, as defined by national law, provided that the situation is declared by a competent public authority and open to judicial supervision, on condition that such provisions already exist in national law by 17 July 1998 ...

Directive 98/50 entered into force on 17 July 1998. (5) The period prescribed for transposition of the directive by the Member States expired on 17 July 2001. (6)

National law

The provisions of Directive 77/187 were implemented in Italian law by Article 2112 of the Civil Code. That article, in the version relevant for the purposes of the present proceedings, provided that in the event of the transfer of an undertaking, the employment relationships continued with the new owner and that the employees' rights arising from those relationships were maintained. It also laid down that the transferor and the transferee were jointly and severally liable for all debts owing to the employees at the time of the transfer.

However the Italian legislature introduced an exception to that principle in respect of transfers taking place in the context of certain administrative or judicial procedures.

Thus, Article 47(5) and (6) of Law No 428 of 29 December 1990, laying down provisions for implementation of the obligations arising from Italy's membership of the European Communities (Community Law for 1990) (7) provides: Where the transfer concerns an undertaking or production unit declared by the Comitato di ministri per il coordinamento della politica industriale [Ministerial Committee for the coordination of industrial policy, CIPI], pursuant to Article 2(5)(c) of Law No 675 of 12 August 1977, (8) to be in a situation of crisis, or an undertaking which has been declared insolvent or is the subject of an approved composition consisting in the disposal of assets, or an undertaking the compulsory liquidation of which has been published or which has been made subject to the special administration procedure ─ whether or not provision has been made for the continuation of the business, or business has been suspended, or the consultation referred to in the foregoing paragraphs has resulted in any agreement providing for the continued employment of personnel, even in part ─, Article 2112 of the Civil Code shall not, unless the agreement lays down more favourable conditions, apply to employees whose employment relationship continues with the transferee. Such an agreement may additionally provide that surplus personnel are to be excluded from the transfer and that the latter are to continue, wholly or in part, in the service of the transferor. The employees who are not recruited by the transferee, the lessee or the new operator shall have a right of priority in respect of vacancies filled by the latter during a period of one year from the transfer or during a longer period fixed by collective agreement. Article 2112 of the Civil Code shall not apply to the abovementioned employees, who are recruited by the transferee, the lessee or the new operator after transfer of the undertaking.

The pre-litigation procedure

The Commission considered that the derogations laid down by Article 47(5) and (6) of Law No 428/90 were incompatible in part with Directive 77/187.

The Commission took the view that the Italian authorities could not exclude application of the safeguards provided for by Article 2112 of the Italian Civil Code where the transfer of an undertaking took place in the context of procedures for declaring undertakings to be in a situation of crisis, special administration procedures and approved composition procedures consisting in the disposal of assets.

Accordingly, on 16 July 1997, the Commission decided to initiate the procedure under Article 169 of the EC Treaty (now Article 226 EC) and give the Italian authorities notice to submit their observations. In its letter of formal notice the Commission stated that Article 47(5) and (6) of Law No 428/90 did not implement Articles 3 and 4 of Directive 77/187 correctly because it precluded the safeguards provided for by Article 2112 of the Italian Civil Code in the abovementioned procedures.

As it was not satisfied with the reply which the Italian authorities gave to this letter, the Commission issued a reasoned opinion on 4 August 1999.

In its opinion the Commission began by pointing out that Article 47(5) and (6) of Law No 428/90 infringed Directive 77/187. Next, the Commission state[d] that the new directive 98/50/EC, [adopted after the letter of formal notice], had not enabled Italian law to be harmonised in such a way as to render it fully consistent with Community law .... (9) The Commission thus considered that although Article 4a permitted a certain flexibility in respect of transfers of undertakings in difficulty, it did not cover the hypotheses referred to in Article 47(5) and (6) of Law No 428/90. (10)

The Italian Government responded to the reasoned opinion on 15 October 1999.

As the Commission was not persuaded by that response, it brought the present action on 23 March 2001. The Commission seeks a declaration that: ... by maintaining in force Article 47(5) and (6) of Law No 428 of 29 December 1990, which:

(a) allow for the non-application of the automatic transfer of all contracts of employment or employment relationships, from the transferor to the transferee, in respect of undertakings subject to an approved composition procedure involving the transfer of asset[s], or a special administration procedure, where these undertakings pursue their business after the transfer;

(b) in respect of undertakings declared to be a situation of economic crisis, do not provide for the transfer, from the transferor to the transferee, of the employees and the debts arising from a contract of employment or employment relationship, the Italian Republic has failed to fulfil its obligations under Council Directive 77/187 of 14 February 1977 ... and in particular Articles 3 and 4 thereof.

The Italian Republic, for its part, requests the Court to dismiss the application as inadmissible or, at the very least, as unfounded.

III ─ The admissibility of the application

Arguments of the parties

The Italian Government submits that the application is inadmissible.

It points out that Directive 98/50 was adopted on 29 June 1998, after the letter of formal notice was sent, but before notification of the reasoned opinion. Consequently, in its letter of formal notice the Commission examined the compatibility of Law No 428/90 solely with respect to the provisions of Directive 77/187. However, in its reasoned opinion and in its application initiating the proceedings, the Commission extended this examination to Directive 98/50.

The Italian Government is accordingly of the opinion that the Commission extended the subject-matter of the dispute, as defined in the letter of formal notice. According to that government, that extension was all the more impermissible because the amendments made by Directive 98/50 were substantial, and when the Commission had issued its reasoned opinion and brought the action, the period prescribed for transposing Directive 98/50 had not yet expired.

The Commission admits that, unlike the letter of formal notice, the reasoned opinion and the application refer to Directive 98/50. However, it states that this addition was not intended to alter the subject-matter of the dispute, but to strengthen its position by demonstrating that the failure to fulfil obligations had not disappeared with the entry into force of Directive 98/50. The Commission notes, moreover, that the statement of complaints in the letter of formal notice, the operative part of the reasoned opinion and the form of order sought in the application concern an identical matter, namely an infringement of Articles 3 and 4 of Directive 77/187 (alone).

Assessment

By virtue of Article 226 EC the Commission may bring an action before the Court for failure to fulfil an obligation only after it has invited the Member State concerned to submit its observations.

The Court has consistently held that the purpose of the letter of formal notice is thus to delimit the subject-matter of the dispute and to indicate to the Member State concerned the factors enabling it to prepare its defence. (11)

The Court considers that the opportunity for the Member State to be able to submit its observations constitutes an essential guarantee, compliance with which is an essential formal requirement of a procedure for failure to fulfil obligations.

Consequently, the reasoned opinion and the proceedings brought by the Commission must be based on the same complaints as those set out in the letter of formal notice.

In other words, the subject-matter of the dispute cannot be altered in the reasoned opinion or in the application initiating the proceedings.

In the present case, I think that the Commission did not alter the subject-matter of the dispute during the pre-litigation procedure.

It is true, as the Italian Government points out, that the grounds of the reasoned opinion and the application are appreciably different from those contained in the letter of formal notice. As we have seen, the letter of formal notice did no more than state that Law No 428/90 did not implement Articles 3 and 4 of Directive 77/87 correctly. On the other hand, in the reasoned opinion and the application the Commission not only reiterated those elements, but also stated that the new Directive 98/50/EC had not rendered the Italian legislation compatible with Community law. The Commission compared the regime established by Law No 428/90 with that provided for by Article 4a of Directive 98/50 and concluded that the Italian legislation goes far beyond what is allowed by Directive [98/50].

That approach could indeed appear to be questionable inasmuch as the Commission did not take the trouble to explain that the reference to Directive 98/50 did not alter the subject-matter of the dispute.

However, unlike the Italian Government, I think that these factors are not sufficient for the present action to be declared inadmissible.

Firstly, it is important to point out that as to the substance of the case, the Commission formulated identical complaints during the entire procedure.

1.In the statement of complaints in the letter of formal notice, the Commission objected that the Italian Republic had infringed Articles 3 and 4 of Directive 77/187 on the ground that Article 47(5) and (6) of Law No 428/90 did not apply the safeguards prescribed by Article 2112 of the Italian Civil Code to transfers of undertakings taking place in the context of procedures for a declaration of crisis, special administration procedures and composition procedures consisting in the disposal of assets.

In the operative part of the reasoned opinion and in the form of order sought in the application the Commission's complaint was strictly identical. The Commission found ─ or requested the Court to find ─ that by maintaining in force the provisions in Article 47(5) and (6) of Law No 428 of 29 December 1990, which ... provide for the non-application of the automatic transfer of all contracts of employment or employment relationships ... in respect of undertakings subject to an approved composition procedure consisting in [the] disposal of asset[s], or a special administration procedure [and which,] in respect of undertakings declared to be a situation of economic crisis, do not provide for the transfer of ... the debts arising from a contract of employment or employment relationship, the Italian Republic has failed to fulfil its obligations under Council Directive 77/187 of 14 February 1977 ... and in particular Articles 3 and 4 thereof.

It follows that, contrary to what the Italian Government maintains, the Commission did not extend or alter the subject-matter of the dispute, as defined by the letter of formal notice. Notwithstanding the reference made to Directive 98/50 in the reasoned opinion and in the application, the Commission neither found nor sought a finding that the Italian Republic had failed to fulfil its obligations under that directive. Nor did the Commission extend its complaints to transfers of undertakings taking place in the context of national procedures other than procedures for a declaration of crisis, special administration procedures or composition procedures consisting in the disposal of assets.

The Commission thus based the reasoned opinion and the application on complaints identical to those which it had set out in the letter of formal notice.

Secondly, I think that the contested reference to Directive 98/50 did not have a decisive effect on the Italian Government's right to a fair hearing.

It is true that in its response to the reasoned opinion the Italian Government relied solely on the provisions of Directive 98/50 in refuting the Commission's complaints. It argued, inter alia, that the exceptions provided for by Article 47(5) and (6) of Law No 428/90 were covered in part by Article 4a of Directive 98/50.

However, this does not mean that the Italian authorities were misled by the disputed reference. It must be noted that, in its response to the letter of formal notice, the Italian Government had already put forward a similar defence. It had pointed out that, in April 1997, the Commission had submitted a proposal for a directive amending Directive 77/187 and intended to allow greater flexibility in respect of transfers of undertakings taking place in the context of collective procedures. The Italian Government had thus maintained that Article 47(5) and (6) of Law No 428/90 was in accordance with the provisions of the abovementioned proposal.

It follows that, for reasons specific to itself, the Italian Government chose to base its defence exclusively on the possible compliance of Law No 428/90 with the Community provisions subsequent to Directive 77/187. Although it had the possibility to do so, the Italian Government therefore chose not to rebut the Commission's complaints in the light of the provisions of Directive 77/187.

Consequently, I am of the opinion that the reference to Directive 98/50 did not prevent the Italian Republic from putting forward its arguments during the pre-litigation procedure.

I therefore propose that the Court should declare the application admissible and thereafter determine whether the Italian Republic has failed to fulfil its obligations under Directive 77/187.

As to the substance, the Commission complains that the Italian Republic excludes, by Article 47(5) and (6) of Law No 428/90, the application of Directive 77/187 to transfers of undertakings taking place in the context of procedures for a declaration of crisis, special administration procedures or approved composition procedures consisting in the disposal of assets.

In its reply the Commission none the less withdrew its first complaint regarding transfers of undertakings taking place in the context of special administration procedures under Italian law.

I will therefore consider, in turn, the two other complaints raised by the Commission. First of all, I shall recall the principles laid down by case-law as regards the scope of application of Directive 77/187.

We know that Directive 77/187, by virtue of Article 1(1) thereof, applies to transfers of undertakings as a result of a legal transfer or merger.

The Court was led to clarify the notion of legal transfer in the light, in particular, of transfers of undertakings carried out in the course of administrative or judicial procedures.

Thus, in Abels, the Court ruled that Directive 77/187 did not apply to transfers of an undertaking, business or part of a business in the context of insolvency proceedings instituted with a view to the liquidation of the assets of the transferor under the supervision of a judicial authority.

On the other hand, it is clear from the same judgment that Directive 77/187 is applicable to a procedure for surséance van betaling (suspension of payment of debts), even though it has certain features in common with insolvency proceedings. The Court thus held that the reasons supporting the non-application of Directive 77/187 in insolvency proceedings were not valid when the supervision of the court over the proceedings in question was more limited than in insolvency proceedings and when the object of the former proceedings was primarily to safeguard the assets of the insolvent undertaking and, as the case might be, to continue the business of the undertaking by means of a collective suspension of the payment of debts.

Similarly, in d'Urso and Others the Court held that Directive 77/187 did not apply to transfers of undertakings made as part of a creditors' arrangement procedure of the kind provided for in the Italian legislation on compulsory administrative liquidation, the effects of which are comparable to those of insolvency proceedings. On the other hand, the Court held that Directive 77/187 applies where, in accordance with the Italian legislation on special administration for large undertakings in a situation of crisis, the competent authority has authorised the continuance of the undertaking's business for as long as that decree remains in force. In such a case, the primary purpose of the special administration procedure is to give the undertaking a stability that will enable its future activity to be safeguarded. The social and economic objectives thus pursued cannot explain nor justify the circumstance that, when the undertaking concerned is transferred, its employees lose the rights which Directive 77/187 confers on them.

Furthermore, in Spano and Others the Court held that Directive 77/187 is applicable to the transfer of an undertaking which has been declared to be in a situation of crisis under Italian Law No 675/77. The Court pointed out that the purpose of a declaration that an undertaking is in a critical situation is to enable the undertaking to retrieve its economic and financial situation, but above all to preserve jobs, that the procedure in question is therefore designed to promote the continuation of its business with a view to its subsequent recovery, and that by contrast with insolvency proceedings, the procedure whereby an undertaking is declared to be in critical difficulties does not involve any judicial supervision or any measure whereby the assets of the undertaking are put under administration, and does not provide for any suspension of payments.

It follows from that case-law that, for the purposes of determining whether Directive 77/187 applies to the transfer of an undertaking subject to an administrative or judicial procedure, the decisive test is the purpose of the procedure in question. However, in Dethier Équipement and Europièces the Court held that, if the criterion relating to the purpose of the procedure is not conclusive, it is necessary to consider that procedure in detail, such as the existence and scope of judicial supervision.

It is in the light of those principles that I will consider the two complaints raised by the Commission against the Italian Republic.

The approved composition procedure consisting in the disposal of assets (second complaint)

In its second complaint the Commission claims that the Italian authorities do not apply Directive 77/187 to transfers of undertakings taking place in the context of an approved composition procedure consisting in the disposal of assets.

61.The parties to the dispute have provided the Court with little information as regards the content of this procedure.

62.It is apparent from the documents before the Court that, under Italian law, the composition procedure is regulated by Articles 160 to 186 of Royal Decree No 267 of 16 March 1942, laying down rules for insolvency, composition, supervised administration and compulsory liquidation. (39)

63.It appears that the course of this procedure is as follows.

64.The businessman, who is in a state of insolvency, first lodges with the competent court an application proposing a composition to his creditors. If the application is admissible, the court appoints a judicial auditor who is responsible for drawing up a report on the causes of the difficulties encountered by the debtor, on the proposals for a composition and the guarantees offered to the creditors. Further, the proposal for a composition is submitted to the creditors for approval. If the creditors approve the proposal, the court may, subject to carrying out certain investigations, approve the composition, which thus becomes binding for all the parties (that is, the debtor and the creditors). The composition is subsequently implemented under the supervision of the judicial auditor and in accordance with the procedures laid down by the approving judgment.

65.That said, the purpose of the approved composition procedure for the disposal of assets is not clear from the national legislation.

66.Certain provisions of Decree No 267/42 suggest that the procedure at issue is intended to ensure the liquidation of the debtor's assets with a view to paying off the creditors collectively.

67.Thus, Article 160, second paragraph, point 2, of Decree No 267/42 provides that, to be eligible for the procedure, the owner of the business must make an offer to his creditors to dispose of all his assets existing on the date of the proposal of the composition in payment of his debts, ... on condition that the valuation of those assets provides grounds for believing that the creditors will be satisfied to the extent of at least [40% of the unsecured debts]. Similarly, Article 182 of Decree No 267/42 states that, in the judgment approving the composition, the court must appoint one or more liquidators and a committee of three or five creditors to assist in the liquidation and to decide upon its form.

68.However, other provisions of Decree No 267/42 indicate that the main purpose of the national procedure is to prevent the debtor from being put into bankruptcy and that it is therefore designed to ensure the continuance of the undertaking's business.

69.Thus, Article 160 of Decree No 267/42 provides that the owner of the business may propose a composition as long as he has not been declared insolvent. Articles 162, 163, 179 and 181 of the same decree state that, if the employer does not fulfil the criteria for eligibility for the procedure, if he does not lodge the sums required for the composition to be implemented, if the creditors do not approve the proposal or if the conditions for approval by the court are not satisfied, the court must, of its own motion, declare the debtor to be insolvent. Finally, according to Article 181 of Decree No 267/42, before approving the composition, the court must assess the economic expediency [of the composition] for the creditors, having regard to the existing assets and the efficiency of the undertaking as well as the question whether the debtor, in the light of the causes of his difficulties, and of his conduct, deserves the composition.

70.Given those factors, I think that it is difficult to define precisely the objective pursued by the composition procedure for the disposal of assets.

71.Moreover, the participants in the present proceedings submit opposing arguments on this point.

72.The Commission maintains that the main purpose of the procedure in question is to enable the resumption of business and the continuation of trade or industry. (40) According to the Commission, that aim is underlined both by Italian academic legal writing and by the Corte suprema di cassazione (Italy). (41) Thus, although Article 182 of Decree No 267/42 mentions the disposal of assets, the term disposal should be understood as meaning the preservation of the debtor's assets and not their liquidation. (42) Conversely, the Italian Government claims that the composition consisting in the disposal of assets is intended essentially to liquidate the debtor's assets with a view to paying off the creditors collectively. It points out, however, that, according to the case-law of the Corte suprema di cassazione, the procedures at issue result in the definitive loss of the debtor's rights over the entirety of the assets which are the subject of these procedures. (43)

73.It follows from the foregoing that the criterion relating to the purpose of the procedure does not, in the present case, enable it to be determined whether Directive 77/187 applies to transfers of undertakings which take place in the context of a composition consisting in the disposal of assets.

74.In accordance with the Court's case law, (44) it is therefore necessary to go on to examine the modalities of the procedure at issue.

75.In Dethier Équipement, cited above, the question referred to the Court was whether Directive 77/187 applied to the Belgian procedure under which a company is wound up by the court. Finding that an analysis of the purpose of the procedure was not conclusive, the Court considered the modalities of that procedure in detail as follows. (45)

76.The Court thus adopted three criteria for concluding that the situation of an undertaking being wound up by the court presents differences from that of an undertaking subject to insolvency proceedings. Those criteria were the fact the liquidator was part of the company, the absence of a special procedure for establishing liabilities as well as the possibility of enforcing debts individually against the company.

77.It appears that those three criteria are not satisfied in the present case.

78.As regards the first criterion, it is true that Decree No 267/42 does not state whether the liquidator, appointed by the court at the time of the approval, can be an organ of the company or must be a third party vis-à-vis the company. As we have seen, that provision merely requires that the court appoint one or more liquidators without specifying their status. On the other hand, it is certain that the judicial auditor, who is responsible in particular for supervising the carrying out of the composition, cannot be part of the company which is the subject of the procedure. Article 165 of Decree No 267/42 expressly states that the judicial auditor is, so far as concerns the performance of his duties, a public official.

79.Concerning the second criterion, Decree No 267/42 contains a special procedure for establishing liabilities under the supervision of the competent court. It provides that:

─ in his application for composition, the debtor must submit an analysis and estimate of the assets, as well as a list of creditors Article 161, third paragraph.

─ the order declaring the opening of the composition procedure must be appropriately advertised Article 166, first paragraph.

─ after the opening of the composition procedure, the judicial auditor must verify the list of creditors and invite the creditors to present themselves; Article 171, first paragraph. and

─ the judicial auditor is to draw up an inventory of the debtor's estate and, on the debtor's request, the judge may appoint an auctioneer to assist him in evaluating the assets; Article 172.

─ at the creditors' meeting, which is to take place before the judge, the debtor and the creditors are to verify that the competing debts are certain in nature, Articles 174 and 175. and

─ the court may approve the composition only if, in accordance with the second paragraph of point 2 of Article 160 of Decree No 267/42, the assets proposed by the debtor are sufficient to pay the creditors to the extent of a minimum of 40% of the unsecured debts. Article 181, first paragraph, point 3.

80.Decree No 267/42 therefore provides for a special procedure for establishing the liabilities of the undertaking under the supervision of the court.

81.Finally, as regards the third criterion, it will be noted that the Italian legislation expressly prohibits individual steps to enforce debts during the course of the composition procedure. Article 168 of Decree No 267/42 provides that from the date on which the application is lodged and until the judgment approving the composition has become final, the creditors ... may not initiate or pursue actions of enforcement against the assets of the debtor, which shall be void.

82.It follows from these various factors that the Italian procedure for approved composition consisting in the disposal of assets has features which, according to the case-law of the Court, are more akin to insolvency procedures. As the case stands, I am therefore inclined to consider that Directive 77/187 does not apply to transfers of undertakings which take place in the context of that procedure.

83.Since the Commission has not put forward any other elements, I therefore propose that the Court reject the second complaint.

V ─ Costs

84.Article 69(2) of the Rules of Procedure provide that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Article 69(3) provides, however, that the Court may order the parties to bear their own costs where they fail on one or more heads. Furthermore, Article 69(5) provides that a party who withdraws is to be ordered to pay the costs unless the attitude of the other party justifies the contrary.

85.In the present case, I have observed that the Commission withdrew its first complaint, but that that withdrawal was due to observations lodged by the Italian Republic after the commencement of the action. In addition, it has become clear that the Commission's second complaint is well founded, whereas the third complaint must be rejected. Finally, each party has claimed that the other should be ordered to pay the costs of the action.

86.In those circumstances, I propose that the Court order the Italian Republic to pay two thirds of the costs.

VI ─ Conclusion

87.In view of the foregoing considerations, I propose that the Court declare that:

(1) the Italian Republic has failed to fulfil its obligations under Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses, inasmuch as Article 47(5) and (6) of Law No 428 of 29 December 1990 laying down provisions for fulfilment of the obligations arising from Italy's membership of the European Communities (Community law for 1990) precludes the application of the said directive in the event of the transfer of an undertaking, business or part of a business which the Comitato di ministri per il coordinamento della politica industriale (Ministerial Committee for the coordination of industrial policy) has declared to be in a situation of crisis under Article 2(5) of Law No 675 of 12 August 1977 laying down measures for the coordination of industrial policy, restructuring, conversion and development in the relevant sector;

(2) for the rest, the application is dismissed.

(3) the Italian Republic shall pay two thirds of the costs.

* * *

(1) Original language: French.

(2) OJ 1977 L 61, p. 26.

(3)

OJ 1998 L 201, p. 88.

Seventh and eighth recitals in the preamble to Directive 98/50.

Article 3 of Directive 98/50.

Idem, Article 2(1).

GURI No 10 of 12 January 1991, p.5 (Law No 428/90).

Law laying down measures for the coordination of industrial policy, restructuring, conversion and development in the relevant sector (GURI No 243 of 7 September 1977, Law No 675/77).

See Annex 3 to the application (paragraph 5).

See the reasoned opinion (paragraph 6).

See Case 211/81 Commission v Denmark [1982] ECR 4547, paragraph 8; Case 274/83 Commission v Italy [1985] ECR 1077, paragraph 19; Case 229/87 Commission v Greece [1988] ECR 6347, paragraph 12; Case C-289/94 Commission v Italy [1996] ECR I-4405, paragraph 15, and Case C-279/94 Commission v Italy [1997] ECR I-4743, paragraph 14.

See, inter alia, Case 124/81 Commission v United Kingdom [1983] ECR 203, paragraph 6.

See, inter alia, Case C-191/95 Commission v Germany [1998] ECR I-5449, paragraph 55.

See, inter alia, Case 51/83 Commission v Italy [1984] ECR 2793, paragraph 6, and Case C-159/99 Commission v Italy [2001] ECR I-4007, paragraph 54.

See paragraph 16 of this Opinion.

See the reasoned opinion (paragraphs 1 to 4) and the application (paragraphs 10 to 16).

See the reasoned opinion (paragraph 5) and the application (paragraphs 17).

See the reasoned opinion (paragraphs 6 to 7) and the application (paragraphs 18 to 21).

See Annex 1 of the application (9th and 12th subparagraphs).

See Annex 3 to the application.

See paragraph 20 of this Opinion.

See Annex 4 to the application.

See Annex 2 to the application.

As a secondary point, it may be added that even if the Commission had altered the subject-matter of the present dispute, the Italian Republic's argument cannot be accepted as it stands. The case-law shows that when the Commission raises new complaints in the reasoned opinion or the application, the Court declares the application inadmissible only in so far as it concerns those new complaints. On the other hand, the Court considers that the application remains admissible in so far as it concerns the complaints originally set out in the letter of formal notice [see, inter alia, Case 193/80 Commission v Italy, paragraphs 12 and 13, Case 124/81 Commission v United Kingdom, paragraph 7, Case 51/83 Commission v Italy, paragraph 8, Case C-159/99 Commission v Italy, paragraphs 52 to 55, cited above, and Case C-210/91 Commission v Greece [1992] ECR I-6735, paragraphs 10 to 12. It follows that, even if it is considered that the Commission has altered the subject-matter of the dispute, the application would remain admissible in so far as it seeks a declaration of a failure to fulfil obligations under Articles 3 and 4 of Directive 77/187.

Paragraph 12.

Paragraph 7.

GURI No 81 of 6 April 1942 (Decree No 267/42).

See the reply, paragraph 8.

The Commission cites the judgment of the Corte suprema di cassazione of 10 September 1999, No 9663, Peluso v Gramignazzi.

See the reply, paragraphs 8 to 11.

The Italian Government cites the judgment of the Corte suprema di cassazione of 12 January 1999, No 226 (see the defence, paragraphs 13 to 14).

Cited at point 53 of this Opinion.

Paragraphs 29 and 30.

Article 161, third paragraph.

Article 166, first paragraph.

Article 171, first paragraph.

Article 171, second paragraph.

Article 172.

Articles 174 and 175.

Article 181, first paragraph, point 3.